The supply of economic releases picks up today, including the first official estimate of first-quarter GDP for the UK. Meantime, a couple of US numbers will provide more clues on assessing the outlook for economy in the second quarter after a Q1 slowdown: the Redbook Index that tracks retail sales and the Conference Board's Consumer Confidence Index.
UK: Q1 GDP Report (08:30 GMT) Britain’s economy is still growing at a healthy pace, but forecasters expect that today’s first quarter GDP report will show a degree of deceleration. Econoday.com’s consensus forecast anticipates that output will tick lower, rising 0.5% on a quarter-over-quarter basis—down slightly from Q4’s 0.6% increase.
A bit of a yawn for macro, perhaps, but a lesser rate of growth could have political implications for next week’s national election. “Given that the Conservatives and Liberal Democrats are hoping that many undecided voters will ultimately decide to vote for them due to their management of the economy, any slowdown in growth would be very unwelcome news just over a week before the general election,” said Howard Archer, economist at IHS Global Insight.
Perhaps, but given the low bar for growth expectations in the developed world at the moment, a 0.5% increase in GDP will look pretty good. Comparing the UK to the US, for instance, Britain’s faster pace in Q4 remains on track to hold the lead. Indeed, Q1 GDP for the US is due tomorrow, and expectations have been substantially downsized relative to the already sluggish Q4 gain.
Britain may lose some momentum as well in today’s numbers, although it’s not obvious that a downtick will signal a material change in the trend. This month’s estimate of GDP via the National Institute of Economic and Social Research (NIESR) reported 0.6% growth for the three months through March - unchanged from the previous updates. “This is despite the poor performance of both the production and construction sectors,” NIESR advised.
Source: UK Office for National Statistics
US: Redbook Index (12:55 GMT) The US economy stumbled in the first quarter, as tomorrow’s “advance” GDP report is expected to show. But that’s old news, and the market is already reading the early clues on whether there’ll be a second-quarter rebound, as several economists predict. Wells Fargo), for instance, recently summarized the trend as “slow growth in Q1, then back to the trend” for the April to June period.
Q2 data is still mostly a guessing game, of course, but slightly less so with each passing day. Another early clue arrives in today’s weekly update of the Redbook Index, which tracks same-store sales among US retailers. So far, however, this month’s numbers don’t look encouraging. The relatively strong gains in previous months have faded in the last two updates.
Is this an early warning that the loss of momentum in Q1 for the US economy will continue in Q2? It’s too early to say, given the lack of data for the current quarter. One reason for optimism: Gallup’s weekly survey data of consumer spending turned noticeably higher in mid-April against recent history. Does that foretell stronger economic numbers generally? The first installment on an answer begins with today’s Redbook release.
US: Consumer Confidence Index (14:00 GMT) This benchmark from the Conference Board offers another early clue on economic guidance for the start of the second quarter. Based on recent history, the mood on Main Street continues to look strong. After January’s gain in the Consumer Confidence Index (CCI) to a seven-year high, this metric ticked lower but made up some of the mild loss with a modest gain in March. Overall, the first quarter readings reflect a solid improvement over the last year’s data. The question for today: Will the relatively upbeat sentiment in the consumer sector continue to hold steady or improve with the arrival of Q2?
Yes, according to economists. Econoday.com’s consensus forecast anticipates a healthy rise in the confidence index to 103 for April, up from March’s 101.3. Such news would be welcome, of course, in part because it would boost confidence that the recent weakness in retail spending will perk up in next month’s update of retail numbers from Washington.
Meantime, thinking positively about today’s release draws support from the previously released April estimate from a competing index. This month’s preliminary data for The University of Michigan’s widely followed consumer confidence benchmark rose to its second-highest level in more than eight years.
Disclosure: Originally published at Saxo Bank TradingFloor.com